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OECD/G20 Should Standardize Emerging Tax Transparency Code (TTC)

European Union (EU), Australia and the United Kingdom (in Brexit mode) are pitching for BEPS+ initiative in the realm of tax transparency. This marks a new milestone in enhanced corporate governance.

They have separately unveiled plans to goad large multinational corporations/enterprises (MNCs/MNEs) to disclose to public a big & complete picture about taxes they pay in different countries. And MNCs in Australia are already queuing up to declare their resolve to write annual ‘taxes paid’ report for public consideration.

MNCs would also have to disclose certain other information about their operations such as how many persons they employ in each country and their accumulated earnings.

This transparency initiative is bound to enliven public vigil. It would enrich public discourse on aggressive tax planning and tax avoidance resorted to by MNCs – an issue that has been probed, re-probed and analyzed intensely in the West over the last five years.

As put by Craig Marston of KPMG, “The global tax transparency agenda now appears unstoppable. Australia has embraced this agenda. Fuelled by Australia’s BEPS leadership aspirations, poorly informed Senators and the Panama Papers and other revelations, this agenda will continue to be pushed. Existing norms of taxpayer confidentiality and commercial-in-confidence will continue to be overtaken by the public’s demand for confidence that companies are paying their ‘fair share’.”

Jettison Flaws in Doing Business Ranking business

Published on 11 November 2016

(Edited Image Courtesy: artnet.unescap.org)

“Many important policy areas are not covered by Doing Business; even within the areas it covers its scope is narrow. Doing Business does not measure the full range of factors, policies and institutions that affect the quality of an economy’s business environment or its national competitiveness. It does not, for example, capture aspects of macroeconomic stability, development of the financial system, market size, the incidence of bribery and corruption or the quality of the labor force,” says Doing Business (DB) Report 2017.

This observation aptly applies to India. And this is far more important than the 130th rank that India has got among 190 economies on 11 parameters of business regulation assessed in DB 2017.

This annual flagship report of World Bank (WB) group gives an over-simplistic image of doing business in India. It can thus mislead prospective investors. It also does not help policy makers undertake holistic reforms that can make India a more credible business place. WB should revise certain parameters and add new ones to its DB methodology to make cross-country comparison more realistic and inclusive.

Moreover, the domain of information on which DB report is based does not encompass a lot of valuable information. DB report banks on four main sources of information: the relevant laws and regulations; DB’s 39,000 respondents in 190 countries; the governments of the economies covered and the WB Group regional staff.

DB report should factor in all information that does not flow through these four channels for varied reasons.

India’s ranking, in all probability, would be much lower if DB methodology is widened by including vital parameters that bedevil business and economic growth in India and elsewhere.

DB methodology is of bygone era. It is devoid of ground reality about business challenges/regulations faced by all stakeholders including Government organizations, public sector undertakings (PSUs), organized private enterprises and informal business sector.

India has strong case to revoke Indus Water Treaty

“The Indus Water Treaty (IWT) was an international treaty and India could not revoke it unilaterally,” stated Sherry Rehman of Pakistan Peoples Party (PPP).

A Pakistan Government release last month also quoted her as saying that “India had adopted a policy of ‘water terrorism’ against Pakistan”. The propaganda release is headlined ‘Stopping of water by India to be considered an act of war: Senators.’

Sherry is clever by half. So are many Indian peaceniks and Pak apologists who have flooded the media with warnings and scare-mongering to browbeat Modi Government from tinkering with IWT.

Had they cared to respect blacked-out facts, they would have realized that India has a genuine case to rescind archaic IWT, which was signed in September 1960. This would become crystal-clear later in this column.

The first fact that Sherry and her ilk have not disclosed is that their contention against unilateral revocation is hypocritical. This same contention was once made by India’s first Prime Minister, Jawaharlal Nehru, when Pakistan backtracked.

“An agreement between two parties could not be abrogated by unilateral action,” he stated on 8th July 1954 while referring to IWT precursor, Inter-Dominion Agreement (IDA) on Punjab Canal Waters dated 4th May 1948. It provided reasonable framework for resolving canal water dispute between West Punjab (Pakistan) and East Punjab (India).

Both LNG importing and exporting nations have either crafted or are preparing strategies to make the best out of expanding global LNG market.

“The age of the current LNG market is just dawning,” says Japan, the world’s largest LNG importer in its LNG strategy announced in May 2016. The strategy lists both internal and global reforms to make LNG markets competitive and fair to all stakeholders.

European Union (EU) too is gearing up to shape global LNG market to beef up its energy security.

“A larger and more liquid global LNG market presents an opportunity for the EU. However the globalisation of the LNG market also has an important foreign policy dimension: as a major importer of LNG (the second largest after Japan), the EU has a keen interest in promoting free, liquid and transparent LNG markets around the world,” says European Commission’s (EC’s) strategy for LNG and gas storage unveiled in February 2016.

According to International Gas Union's (IGU’s) World LNG Report 2016, total LNG trade reached 244.8 million tonnes in 2015, up 4.7 MT from 2014. The decline in oil prices and growing weakness in Pacific demand led all global LNG price markers to fall in 2015, from an average $15.60/MMBtu in 2014 to $9.77/MMBtu in 2015.